MG106 Strategic Management
London School of Economics and Political Science
June 30, 2025
1️⃣ Root causes: What created these problems? How serious?
2️⃣ Pressure sources: SPH system or management behavior?
3️⃣ Memo effectiveness: Does Exhibit 3 clarify sell/non-sell time?
4️⃣ System redesign: How would you fix compensation/policies?
Framework: Resource-Based View + Internal Organizational Environment
Task: 15 minutes to discuss ALL questions 🕐
Start with Nordstrom’s business model
WHO 👥
WHAT 🎁
HOW 🔧
Key Resource: Service-oriented employees earning 2x industry average
But how do you manage this human capital?
What SPH Measures:
The Trade-offs (page 6):
| Choice | Result | Impact |
|---|---|---|
| Report less hours | Higher SPH ✅ | Better shifts 🌟 |
| Report all hours | Lower SPH ❌ | Risk termination 🚫 |
Rational response: Work off the clock
Measured Activities 📊
Unmeasured Activities 🤝
The Contradiction: Both create value, only one counts
Result: 8-10 hours/week unpaid (Exhibit 4)
Escalation Path:
Damage Scale:
Resource at Risk: 90-year reputation
Intangible assets can vanish overnight
Implicit Pressures:
Explicit Actions (per case):
System enables, management amplifies
| Memo’s categories | ||
|---|---|---|
| Activity | Classification | Employee Reality |
| Deliveries | Non-sell | “Part of service” |
| Thank-you notes | Do at home anyway | |
| Stock work | Expected off-clock | |
| Meetings | Still hurts SPH | |
Every activity connects to relationships - can’t separate service from selling
Current State:
Add Metrics For:
Match measurements to strategic objectives
Keep:
Change:
Key: Preserve culture while fixing exploitation
Evolution, not revolution
Tangible Resources:
Intangible Resources:
Which create sustainable advantage?
The Nordstrom Case Shows:
Good strategy + Wrong organization = Poor outcomes
All elements must reinforce each other
Measurement
Culture
Alignment
Excellence requires coherent systems
Read: The Apple case
Questions to consider:
Focus on: How resources and capabilities create advantage 🎯